Feb. retail-sales report offers positive surprise
AP Economics Writer
WASHINGTON – Retail sales posted a surprising increase in February as consumers did not let major snowstorms stop them from racking up purchases. The advance, the biggest since November, provided hope that the recovery from the Great Recession is gaining momentum.
Some economists cautioned, though, that spending increases will remain modest as long as wages stay flat and job creation weak. They also noted that the government revised down the increase in retail sales for January.
For February, sales rose 0.3 percent, the Commerce Department said Friday. That surpassed expectations that sales would decline 0.2 percent.
The overall gain was held back by a 2 percent decline in auto sales, reflecting in part the recall problems at Toyota. Excluding autos, sales rose 0.8 percent. That was far better than the 0.1 percent increase excluding autos that economists had forecast.
But the February sales gain followed a scant rise in January and a slight decline for December. The increase for January was revised down from 0.5 percent to 0.1 percent.
“Weak jobs growth, low wages growth and tight credit mean that any further acceleration in consumption growth is unlikely,” Paul Dales, an economist at Capital Economics, wrote in a research note.
Still, the February gain suggested that consumers are spending more freely than they were a few months ago. The increases were widespread.
Sales surged at department stores, furniture stores, appliance shops and hardware stores. Restaurants and bars enjoyed a 0.9 percent advance, their biggest gain in nearly two years. That suggested that snowbound Americans headed out to eat and get a break from their homes.
Consumer spending is being watched carefully because it accounts for 70 percent of total economic activity. Economists have been worried that the economic recovery could falter if spending begins to lag. The better-than-expected February gain could ease those concerns.
Economists are hoping that businesses, which have shed 8.4 million jobs since the recession began in December 2007, will start rehiring laid off workers. That would give households the incomes they need to support spending growth.
Some analysts had suspected that the February retail sales report could offer a positive surprise, given encouraging news last week from the nation’s big retail chains. The International Council of Shopping Centers had reported that sales jumped 3.7 percent in February compared with a year ago. That marked the third straight increase.
Shoppers shrugged off major snowstorms to visit a broad array of merchants from luxury retailer Nordstrom Inc. to middlebrow Macy’s Inc. to discounter Target Corp. All three chains reported solid sales increases that beat analysts expectations.
“The economy is starting to accelerate,” said Christopher Rupkey, an economist at Bank of Tokyo-Mitsubishi in New York. “The snowstorms couldn’t keep consumers away from the cash registers and neither could the constraints imposed by tightening credit card terms and near double-digit unemployment.”
In a separate report, Commerce said business inventories were basically unchanged in January. Total business sales rose 0.6 percent, the eighth straight monthly increase.
Economists are hoping that the increases in sales will drive businesses to restock their depleted store shelves. The restocking would boost production and provide increased support for the recovery.
The retail sales report Friday showed that sales at general merchandise stores, the category that includes department stores and big discounters such as Wal-Mart Stores Inc., rose by 1 percent in February after a 1.3 percent rise in January.
Sales at appliance stores were up 3.7 percent while sales at hardware stores rose by 0.5 percent. Sales at gasoline stations posed a 0.3 percent rise.